90 test bank for strategic management and competitive advantage international version 4th edition barney

D Substitutes The products or services provided by a firm's rivals meet ________ customer needs in ________ ways as the product provided by the firm itself.. Industries in which a large

90 Test Bank for Strategic Management and

Competitive Advantage International Version 4th

Edition Barney

Multiple Choice Questions

Buyers tend to have less power when

1 A) a firm has only one buyer, or a small number of buyers.

2 B) the products or services being sold to buyers are standard and not

differentiated.

3 C) the supplies they purchase are an insignificant portion of the costs of their final products.

4 D) they are not earning significant economic profits.

If your customers value your products more when they have

your product and another firm's product rather than when they have your product alone, the other firm is considered to be a

1 A) competitor.

2 B) complementor.

3 C) rival.

4 D) substitute.

make a wide variety of raw materials, labor and

other critical assets available to firms

1 A) Buyers

2 B) Rivals

3 C) Suppliers

4 D) Substitutes

The products or services provided by a firm's rivals meet

customer needs in ways as the product provided by the firm itself

1 A) different; the same

2 B) approximately the same; the same

3 C) different; different

4 D) approximately the same; different

Which of the following is the best example of forward vertical

integration?

1 A) A car dealership opening up its own automobile manufacturing plant

2 B) A car company opening its own dealerships to sell its products directly to customers

3 C) A car company opening its own chain of video rental stores

4 D) A car company opening a plant to product motorcycles

valuable assets are resources required to

successfully compete in an industry

1 A) Strategically

2 B) Pedestrian

3 C) Globally

4 D) Domestically

Which type of competition is characterized by a small

number of firms, homogeneous products and costly entry and exit?

1 A) Perfect competition

2 B) Monopolistic competition

3 C) Oligopoly

4 D) Monopoly

Consolidation strategy is a good option in what type of

industry?

1 A) Mature

2 B) Emerging

3 C) Fragmented

4 D) Declining

The values, beliefs and norms that guide behavior in society

are known as

1 A) climate.

2 B) demographics.

3 C) economics.

4 D) culture.

costs exist when customers make investments in

order to use a firm's particular products or services

1 A) Strategic-switching

2 B) Competitive-switching

3 C) Customer-switching

4 D) Resource-switching

The most promising opportunity for a firm in a declining

industry is to

1 A) establish itself as a first mover in the post-shakeout industry.

2 B) become a market leader in the pre-shakeout industry.

3 C) become a fast follower in the pre-shakeout industry.

4 D) merge with another firm.

are advantages that come to firms that make

important strategic and technological decisions early

in the development of an industry

1 A) Visionary advantages

2 B) First-mover advantages

3 C) Comparative advantages

4 D) Missionary advantages

Rivalry tends to be high when

1 A) there are few firms in an industry and these firms tend to be unequal in size.

2 B) the industry growth rate is higher.

3 C) firms are unable to differentiate their products.

4 D) production capacity can be added in small increments.

Civil wars, political coups, terrorism, wars between

countries, famines, and country or regional economic recessions are all examples of which element of the general environment?

1 A) Demographics

2 B) Specific international events

3 C) Economics

4 D) Culture

Frequent price cutting by firms in an industry, frequent

introduction of new products by firms in an industry and intense advertising campaigns are indications of

1 A) high power of buyers.

2 B) high threat of entry.

3 C) high levels of rivalry.

4 D) high threat of substitutes.

The major opportunity facing firms in fragmented industries

is

1 A) refining their current products and emphasizing an increase in service quality.

2 B) developing new products and technologies.

3 C) creating a first-mover advantage through technological leadership.

4 D) the implementation of strategies that began to consolidate the industry into a smaller number of firms.

In the S-C-P model, refers to the strategies that

firms in an industry implement

1 A) structure

2 B) strategy

3 C) conduct

4 D) performance

Which of the following statements regarding substitutes is

accurate?

1 A) In the extreme, substitutes can ultimately replace an industry's products or services.

2 B) Substitutes place a floor on the prices firms in an industry can charge and on the profits firms in an industry can earn.

3 C) Substitutes rarely impact the profitability that firms in an industry can earn.

4 D) The importance of substitutes in reducing the profit potential in a wide variety of industries is decreasing.

Firms that have either recently begun operations in an

industry or that threaten to begin operations in an

industry soon are considered to be in the five forces framework

1 A) barriers to entry

2 B) new entrants

3 C) suppliers

4 D) buyers

The consists of broad trends in the context in

which a firm operates that can have an impact on a firm's strategic choices

1 A) micro-environment

2 B) general environment

3 C) task environment

4 D) internal environment

A(n) is any individual, group, or organization

outside a firm that seeks to reduce the level of that firm's performance

1 A) environmental threat

2 B) environmental opportunity

3 C) environmental equalizer

4 D) competitive advantage

Industries in which a large number of small or medium-sized

firms operate and no small set of firms has dominant market share or creates dominant technologies are called industries

1 A) fragmented

2 B) mature

3 C) emerging

4 D) declining

Firms that engage in a long, systematic phased withdrawal

from an industry, extracting as much value as possible during the withdrawal period, are following a(n)

strategy

1 A) niche

2 B) expansion

3 C) divestment

4 D) harvest

exist when a firm's cost rise as a function of its

volume of production

1 A) Economies of scale

2 B) Economies of scope

3 C) Diseconomies of scale

4 D) Learning cure effects

An industry in which a large number of small or

medium-sized firms operate and no small set of firms has

dominant market share or creates dominant

technologies is known as a(n) industry

1 A) fragmented

2 B) consolidated

3 C) mature

4 D) emerging

Which type of competition is characterized by a large

number of firms, heterogeneous products and low cost

of entry and exit?

1 A) Perfect competition

2 B) Monopolistic competition

3 C) Oligopoly

4 D) Monopoly

The products or services provided by a firm's substitutes

meet customer needs in ways as the product provided by the firm itself

1 A) different; the same

2 B) approximately the same; the same

3 C) different; different

4 D) approximately the same; different

Within the five forces framework, the five most common

threats facing firms from their competitive

environment include each of the following except

1 A) substitutes.

2 B) complementors.

3 C) suppliers.

4 D) buyers.

Mature industries are characterized by

1 A) an increase in total industry demand.

2 B) faster increases in production capacity.

3 C) a slowdown in the introduction of new products or services.

4 D) a decrease in the amount of international competition.

When activity in an economy is relatively low for a short

period of time, the economy is said to be in a

1 A) recession.

2 B) depression.

3 C) prosperous cycle.

4 D) boom.

Firms in industries characterized by can expect to

earn only competitive parity

1 A) perfect competition

2 B) monopolistic competition

3 C) oligopoly

4 D) monopoly

industries are newly created, or newly recreated

industries formed by technological innovations,

changes in demand, or the emergence of new

customer needs

1 A) Mature

2 B) Emerging

3 C) Fragmented

4 D) Declining

Overall, the average level of performance in an industry is

likely to be highest when

1 A) the threat level of all five forces is high.

2 B) the threat level of rivalry and substitutes is low, but the threat level of suppliers, buyers and new entrants is high.

3 C) the threat level of rivalry, substitutes and new entrants is high, but the threat level of buyers and supplies is low.

4 D) the threat level of all five forces is low.

The advantages that come to firms that make important

strategic and technological decisions early in the

development of an industry are known as advantages

1 A) first-mover

2 B) competitive

3 C) early-entrant

4 D) first-comer

Which if the following attributes makes suppliers a stronger

threat?

1 A) The supplier's industry is dominated by a small number of firms.

2 B) When the product or service provided by suppliers is not highly differentiated

3 C) When suppliers are threatened by substitutes

4 D) When suppliers are not able to enter into and begin competing in a firm's industry

In general, first-mover advantages can arise from any of

these sources except

1 A) technological leadership.

2 B) preemption of strategically valuable assets.

3 C) the creation of customer switching costs.

4 D) using an imitative strategy to introduce improved versions of competitors' new products.

All other things being equal, which of the following would

lead to lower barriers to entry in an industry?

1 A) The existence of economies of scale in the industry

2 B) Products are highly differentiated in the industry.

3 C) Industry incumbents have learning-curve cost advantages.

4 D) Raw materials are widely and readily available at a competitive price.

All of the following are elements of the general environment

except

1 A) technological trends.

2 B) demographic trends.

3 C) industrial trends.

4 D) cultural trends.

In a perfectly competitive industry,

1 A) there are relatively few firms operating in the industry.

2 B) the products and services sold by firms in the industry are very different from each other.

3 C) it is very costly for firms to enter the industry.

4 D) it is not very costly for firms to exit the industry.

is/are the distribution of individuals in a society in

terms of age, sex, marital status, income, ethnicity, and other personal attributes that may determine

buying patterns

1 A) Demographics

2 B) Economics

3 C) Technological trends

4 D) Culture

True - False Questions

The major opportunity facing firms in fragmented industries

is the implementation of strategies that begin to

consolidate the industry into a smaller number of

firms

1 True

2 False

Diseconomies of scale exist in an industry when a firm's

costs fall as a function of that firm's volume of

production

1 True

2 False

The S-C-P model assumes that any competitive advantages a

firm has in an industry must benefit society

1 True

2 False

Learning-curve cost advantages are present when the cost

of production falls with the cumulative volume of

production

1 True

2 False

All divestments are caused by industry decline

1 True

2 False

The threat of entry in an industry depends on the cost of

entry, and the cost of entry, in turn, depends upon the existence and "height" of barriers to entry

1 True

2 False

A firm's general environment consists of broad trends in the

context within which the firm operates that can have

an impact on the firm's strategic choices

1 True

2 False

A severe recession that lasts for several years is known as a

depression

1 True

2 False

To a firm seeking competitive advantage, an environmental

threat is any individual, group, or organization outside

a firm that seeks to reduce the level of that firm's

performance

1 True

2 False

Suppliers are a greater threat to firms in an industry when

suppliers are threatened by substitutes

1 True

2 False

In general, technological change creates opportunities, but

not threats

1 True

2 False

In an industry, the products or services provided by a firm's

rivals meet approximately the same customer needs in the same way as the products or services provided by the firm itself, whereas substitutes meet approximately the same customer needs but do so in different ways

1 True

2 False

The threat of rivalry tends to be high in an industry when

firms are able to meaningfully differentiate their

products

1 True

2 False

The objective of divestment is to extract a firm from a

declining industry

1 True

2 False

A fragmented industry is an industry that has experienced an

absolute decline in unit sales over a sustained period

of time

1 True

2 False

A firm following a niche strategy in a declining industry

reduces its scope of operations and focuses on

narrow segments of the declining industry

1 True

2 False

Monopolistically competitive industries consist of only a

single firm

1 True

2 False

It is possible for a single firm to be a complementor of one

firm and a competitor of another

1 True

2 False

The threat of buyers is greater if the products or services

that are being sold to buyers are standard and not

differentiated than if the products sold to buyers are highly differentiated

1 True

2 False

An emerging industry is an industry in which a large number

of small or medium-sized firms operate and no small set of firms has a dominant market share or creates dominant technologies

1 True

2 False

If the owner of a jewelry store who normally purchased

diamonds from a diamond brokerage firm were to open its own diamond brokerage firm, this would be an

example of forward vertical integration

1 True

2 False

Sophisticated software can enhance the value that

customers receive from a personal computer

Therefore, software can be said to be a complementor

of a personal computer

1 True

2 False

In the structure-conduct-performance model, the term

"structure" refers to industry structure, measured by such factors as the number of competitors in an

industry

1 True

2 False

Brand identification and customer loyalty serve as entry

barriers because new entrants not only have to absorb the standard costs associated with starting production

in a new industry, but also have to absorb the costs associated with overcoming an incumbent firm's

differentiation advantages

1 True

2 False

First movers that invest only in technology usually obtain

sustained competitive advantages, even if they do not tie up strategically valuable resources in an industry before their full value is widely understood

1 True

2 False

Culture is the values, beliefs and norms that guide a

behavior in a society, and culture is largely the same across the world

1 True

2 False

According to Bradenburger and Nalebluff, a firm's

competitors help increase the size of a firm's markets while complementors divide this market among a set

of firms

1 True

2 False

According to the S-C-P model, attributes of the industry

structure within which a firm operates define the range

of options and constraints facing a firm

1 True

2 False

A firm's supplier poses a greater threat if the supplier's

industry has a large number of firms, none of which dominate the supplying industry, than if the supplier's industry is dominated by a small number of firms

1 True

2 False